The Canadian economy jumped 1.1 per cent in February, up for the ninth consecutive month. Goods-producing sectors rose 1.5 per cent while services-producing industries were up 0.9 per cent. Canadian real GDP is roughly 1.5 per cent above its pre-pandemic, February 2020 level. Preliminary estimates suggest that output in the Canadian economy grew 0.5 per cent in March.

With a a very high figure for February and strong preliminary numbers continuing into March, the Canadian economy appears to be on a strong growth path as it emerges from the Omicron-related slowdown. The Bank of Canada has noted that the slack in the Canadian economy is largely absorbed, which is partly why it has hiked rates from 0.25 in March to 1 per cent currently. Amid strong GDP growth and high inflation, the expectation is that the bank will again raise rates at its upcoming June 1st announcement by another 0.5 per cent. BCREA forecasts that the bank will continue raising rates until the overnight policy rate reaches 1.75 per cent, the level which prevailed prior to the COVID-19 crisis.

Link:  https://mailchi.mp/bcrea/canadian-economic-growth-real-gdp-february-2022

For more information, please contact: Gino Pezzani.

In BC in March, sales, starts and new listings declined. Sales rose in the Kootenay and Northern regions, while declining in all other areas of the province. Rental costs in Vancouver and Victoria continue broadly rising and remain elevated relative to most other points since the onset of the pandemic.  

Retail sales eased somewhat in February but remain close to record highs. As for March, restaurant reservations in Vancouver are at roughly 86 per cent of the pre-pandemic level. In BC, Google’s measure of movement trends is currently about 17 per cent below pre-pandemic levels.

Although aggregate employment has recovered in BC to pre-pandemic levels, the accommodation and food service sector was about 12 per cent below the pre-pandemic level in March. The labour market has served high-income workers much better than low-income workers. Employment in high-income industries is about 10 per cent above pre-pandemic employment levels, while employment in low-income industries is about 5 per cent below pre-pandemic employment levels.  

Manufacturing and exports both rose to a fresh record in February, while imports rose but remained just shy of a record level.  

Both consumer and business confidence rose slightly in March.  

The number of US and non-US tourists rose in March, with US tourists reaching the highest level since the onset of the pandemic. Still, tourism remains more than two thirds below pre-pandemic levels.  

For a more comprehensive overview of BC's economic recovery, click here.

For more information, please contact: Gino Pezzani.

Canadian seasonally-adjusted retail sales rose 0.1 per cent to $59.9 billion in February. Despite declining sales at sales at motor vehicle and parts dealers (-5.1 per cent), higher sales at clothing and clothing accessories stores (+15.1 per cent) and gasoline stations (+6.2 per cent) drove the total upwards. Core retail sales, which strips out gasoline and motor vehicle and parts dealers, increased 1.4 per cent in February. In volume terms, sales were down 0.4 per cent. 

In BC, seasonally-adjusted sales declined 0.9 per cent in February. Compared to the same month last year, retail sales were up 0.2 per cent in the province. In the Greater Vancouver region, sales fell 0.7 per cent month-over-month and were up 6 per cent year-over-year. 

In February, Canadian e-commerce sales declined 16 per cent to 2.6 billion. As a result, e-commerce decreased from 6.2 per cent of total retail sales in January to 5.3 per cent in February. This percentage remains elevated relative to pre-pandemic levels. 

For more information, please contact: Gino Pezzani.
Link:  https://mailchi.mp/bcrea/canadian-retail-sales-february-2022

anadian prices, as measured by the Consumer Price Index (CPI), rose 6.7% on a year-over-year basis in March, up from 5.7% in February. This was the largest gain since January 1991 (+6.7%). According to Statistics Canada, price rises were broad-based, with groceries up 8.7% year over year, gasoline up 39.8%, durable goods up 7.3%, restaurants up 5.4%, and shelter costs up 6.8%. Excluding gasoline, the CPI rose 5.5% year over year in March. On a monthly basis, prices were up 1.4%, following an increase of 1% in February. In BC, consumer prices rose 6.0% year-over-year. 

With inflation stubbornly high through the first quarter of the year and unemployment in Canada hitting a record low, the Bank of Canada is now planning to bring its policy rate back to a neutral level, between 1.75 and 2.75 per cent, much faster than previously anticipated. We expect the Bank will continue to tighten until there is clear evidence that inflation and inflation expectations are moderating back to normal levels. This more aggressive policy stance has already been priced into 5-year fixed mortgage rates, which are now on a path to surpassing 4 per cent for the first time in a decade.

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-inflation-march-2022

Canadian housing starts fell by 4.0k (-1.6%) to 246.2k units in March at a seasonally-adjusted annual rate (SAAR). Comparing year-over-year, starts were down from March of 2021 (-25.4% y/y). Single-detached housing starts rose 7.1% to 83.9k, while multi-family and others declined 5.6% to 162.3k (SAAR). 

In British Columbia, starts were down 6.7% in March, falling to 32.6k units SAAR in all areas of the province. In areas in the province with 10,000 or more residents, single-detached starts rose 4.7% m/m to 8.1k units while multi-family starts declined 11.7% to 20.6k units. Starts in the province were 54.1% below the levels from March 2021. Starts were down by 2.9k units in Vancouver, 3.6k in Victoria, and 0.4k in Abbotsford, but rose 1.5k in Kelowna from last month. The 6-month moving average trend declined 1.5% to 39.6k in BC in March. 

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-housing-starts-march-2022

For the complete news release, including detailed statistics, click here.

Vancouver, BC – April, 2022. The British Columbia Real Estate Association (BCREA) reports that a total of 11,463 residential unit sales were recorded by the Multiple Listing Service^® (MLS^®) in March 2022, a decrease of 24.1 per cent from a record March 2021. The average MLS^® residential price in BC was $1.096 million, a 15.7 per cent increase from $946,813 recorded in March 2021. Total sales dollar volume was $12.6 billion, a 12.1 per cent decline from the same time last year. 

“Home sales in the province continue to moderate from record highs of this time last year,” said BCREA Chief Economist Brendon Ogmundson. “Given the sharp rise in Canadian mortgage rates and expected tightening from the Bank of Canada, activity will likely slow further in the second half of this year.”
 
Provincial active listings were 12.4 per cent lower than this time last year with the total inventory of homes for sale in the province at under 20,000 units. That level of inventory remains well below the roughly 40,000 listings needed for a balanced market.  
 
Year-to-date, BC residential sales dollar volume was down 4.1 per cent to $28.8 billion, compared with the same period in 2021. Residential unit sales were down 20.1 per cent to 26,577 units, while the average MLS^® residential price was up 20 per cent to $1.086 million. 

For more information, please contact: Gino Pezzani.

The Bank of Canada is signalling that in response to elevated Canadian inflation, it will begin raising its policy rate or “tightening” monetary policy this year.

Historically, Bank of Canada tightening has led to falling home sales and flattening home prices. 

With markets so out-of-balance, it will take a substantial decline in demand to return active listings to a healthy state. 

Model simulations show that the most likely outcome of this round of Bank of Canada tightening will be home sales falling to near their historical averages and for home price growth to moderate, but because of severely low supply, it is unlikely to result in significant home price declines.

Introduction Later this year, the Bank of Canada is widely expected to embark on its first interest rate tightening cycle since 2018. In this Market Intelligence, we will consider how high interest rates might rise and using both historical data and model simulations, we analyze how BC housing markets may be impacted.

For an analysis of how this rate-tightening cycle may impact the BC housing market, please see the most recent Market Intelligence Report, "Too Tight? The Impact of Bank of Canada Tightening on BC Housing Markets" 

For more information, please contact: Gino Pezzani.

The Bank of Canada raised its overnight policy rate by 0.5 per cent to 1 per cent. This was the first rate increase of more than 0.25 per cent since May 2000. The Bank will also begin so called "quantitative tightening" , meaning it will be shrinking its balance sheet over time, reversing the expansion that occurred in response to the pandemic.  In the statement accompanying the decision, the Bank noted that growth in Canada is strong and the economy is moving into a phase of excess demand with tight labour markets and significant pressure on consumer prices. The Bank expects the Canadian economy will grow 4.25 per cent this year before slowing to 3.25 per cent next year.  On inflation, the Bank anticipates inflation will gradually decline from its current 6 per cent rate to 2.5 per cent by the second half of 2023.  Finally, the Bank signalled that interest rates will need to rise further and that the timing and and pace of future increases will be guided by the Banks ongoing assessment of the economy.

With inflation stubbornly high through the first quarter of the year, exacerbated by the impact of the Russian invasion of Ukraine, and unemployment in Canada hitting a record low, the Bank has opted for a more aggressive stance.  Clearly the Bank is now planning to bring its policy rate back to a neutral level, between 1.75 and 2.75 per cent, much faster than previously anticipated. We expect the Bank will continue to tighten until there is clear evidence that inflation and inflation expectations are moderating back to normal levels. This more aggressive policy stance has already been priced into 5-year fixed mortgage rates, which are now on a path to surpassing 4 per cent for the first time in a decade.

Link: https://mailchi.mp/bcrea/bank-of-canada-interest-rate-announcement-yjs23j10gc

For more information, please contact: Gino Pezzani.

Canadian employment rose by 73,000 (+0.4%) in March hitting a fresh record for employment, according to Statistics Canada. The labour market is increasingly tight, with the Canadian unemployment rate declining to 5.3%, the lowest rate on record since comparable data became available in 1976. The total hours worked rose 1.3% in March while average hourly wages were up 3.4% on a year-over-year basis, up from 3.1% in February. Wage gains are below the inflation rate, however, which clocked in at 5.7% year-over-year in February. 

Public health measures continued to ease prior to the survey reference week in March, driving labour market gains. Employment growth occurred in both the services-producing (+42,000; +0.3%) and the goods-producing (+31,000; +0.8%) sectors in March. The labour force participation rate was essentially unchanged at 65%. 

BC's labour market continues to moderately outperform Canada's, with employment rising by 10,500 (0.4%) in March. Metro Vancouver's employment growth once again outpaced the province, with employment rising 9,300 (0.6%). Seasonally-adjusted employment in BC is not only above pre-pandemic levels, but hit a record high for a 6th consecutive month. The unemployment rate ticked upwards slightly in March, reaching 5.1%. Among the provinces, only Quebec and Saskatchewan have lower unemployment rates. 

For more information, please contact: Gino Pezzani.

Link: https://mailchi.mp/bcrea/canadian-employment-march-2022

Vancouver, B.C. – March 31, 2022 – Sales activity in the Lower Mainland’s commercial real estate market reached the second-highest annual total on record in 2021.

There were 2,659 commercial real estate sales in the Lower Mainland in 2021, a 65.3 per cent increase from the 1,609 sales in 2020, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).

Last year’s sales total is the second highest on record behind 2016 when 2,848 sales were recorded. The total dollar value of commercial real estate sales in the Lower Mainland was $14.396 billion in 2021, a 66.7 per cent increase from $8.635 billion in 2020.

"Like residential consumers, businesses and investors became more comfortable operating in the commercial market in the second year of the pandemic," Daniel John, REBGV Chair said. "We saw consistent increases among the different commercial property types both in sales volumes and dollar figures last year."

2021 activity by category

Land: There were 781 commercial land sales in 2021, which is an 86.8 per cent increase from the 418 land sales in 2020. The dollar value of land sales was $7.28 billion in 2021, a 73.6 per cent increase from $4.193 billion in 2020. Office and Retail: There were 1,041 office and retail sales in the Lower Mainland in 2021, which is up 74.1 per cent from the 598 sales in 2020. The dollar value of office and retail sales was $3.136 billion in 2021, a 77 per cent increase from $1.772 billion in 2020.

Industrial: There were 712 industrial land sales in the Lower Mainland in 2021, which is a 36.9 per cent increase from the 520 sales in 2020. The dollar value of industrial sales was $2.394 billion in 2021, a 61.1 per cent increase from $1.486 billion in 2020.

Multi-Family: There were 125 multi-family land sales in the Lower Mainland in 2021, which is up 71.2 per cent from 73 sales in 2020. The dollar value of multi-family sales was $1.586 billion in 2021, a 33.9 per cent increase from $1.184 billion in 2020.

For more information, please contact: Gino Pezzani.